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You can't buy a hybrid cloud as a product nor as a service, and even if you could you would need to customise it for your unique requirements and constraints. The reality today is you need to buy the ingredients from a supplier then roll your own hybrid cloud and to manage this you need to put in place a Hybrid Cloud Manifesto.

The SPC-2 benchmark is a useful benchmark for bandwidth intensive sequential workloads, such as backup, ETL (extraction, translate, load) and large-scale analytics. Wikibon does a deep comparative analysis of the SPC-2 results, time-adjusting the pricing information to correct for different publication dates. Wikibon then analyses performance and price-performance together, and develops a guide to enable practitioners to understand the business options and best strategic fit. Wikibon concludes the Oracle ZS4-4 storage appliance dominates this high-bandwidth processing as of the best combination of good performance and great price performance at the high-end and mid-range of this market.

The thesis of the overall Wikibon research in this area is that within 2 years, the majority of IT installations will be moving to combine workloads together to share data using NAND flash as the only active storage media. This will save on IT budget and improve IT productivity, especially in the IT development function. Our research shows that these changes have the potential to reduce the typical IT budget by 34% over a five year period while delivering the same functionality to the business. The projected IT savings of moving to a shared-data all-flash datacenter for an organization with a $40M IT budget are $38M over 5 years, with an IRR of 246%, an annual ROI of 542%, and a breakeven of 13 months. Future research will look at the potential to maximize the contribution of IT to the business, and will conclude that IT budgets should increase to deliver historic improvements in internal productivity and increased business potential.

The Public Cloud market is still forming – but seems to be poised to soon enter the Early Majority stage of its development where user behavior, preferences, and strategies become more stable. Large enterprises are more discerning of Public Cloud IaaS offerings. Test and development appears to be a key entry point for them since scale, operational complexity, and security/compliance/regulatory demands require a more nuanced approach to Public Cloud for IaaS. Small and Medium enterprises have the greatest need for Public Cloud and should consider well-established, lower risk entry points to Public Cloud like SaaS, Email, and Web Applications before venturing into Mission Critical and IaaS workloads to help them navigate an increasingly complex and costly IT infrastructure environment.

Ed. note: This is the first in a three-part series drawn from a major report on Amazon AWS by Wikibon Co-Founder and Chief Analyst David Vellante. The next section will look at how other IaaS providers can compete successfully with the Amazon steamroller. The third will look at the implications for CIOs in medium-to-large organizations.

With close to $1.5 billion in AWS revenue from IaaS, $57 billion in revenue overall in 2012, and a $120 billion market cap, more than HP, Dell, and EMC combined, Amazon is the 700-pound gorilla of cloud services. And it is eating up the market with a closed-loop strategy based on a low-margin pricing strategy that includes passing on savings Amazon achieves as its purchasing volumes increase, along with an aggressive development program that produces a constant stream of upgrades and new features. So as it adds more business, it commands higher volume discounts from its suppliers that it uses to decrease its prices at a rate of once a quarter, attracting more business.

This, writes David Vellante in his comprehensive new analysis of Amazon’s AWS business, “Cloud Computing 2013: The Amazon Gorilla Invades the Enterprise” has driven a 25%-30% year-to-year growth rate for the past four quarters. And at the AWS re:Invent conference in November, Amazon executives made it clear that they plan to disrupt the current enterprise computing landscape generally and infrastructure services specifically by bringing this low-margin strategy into enterprise IT.

His analysis is based on a just-finished Wikibon study of Amazon’s impact consisting primarily of in-depth interviews with 25 AWS customers and cloud services providers and analysis of service contracts for Amazon AWS and other providers.

Amazon, he writes, catalyzed what is today called “cloud computing” when it introduced AWS in 2006. Today it competes on such a massive scale that “very few, if any, IT organizations and competitors will be able to match Amazon’s size, cost structure, and pace of functional delivery.”

Shifting CAPEX to OPEX: This, Vellante writes, is one of the most appealing and defensible values of AWS.

Lower costs: Referencing an IDC study commissioned by Amazon, AWS executives cite 70% lower TCO. Wikibon, however, cautions that its research shows that on an apples-to-apples basis, renting from Amazon is often significantly more expensive than owning, especially for companies with over $1B in revenue.

Elastic – no guesswork: This value point is totally legitimate, important as the economic disaster of 2008-’09 demonstrated, and something that few if any internal IT organizations have matched.

Speed and agility: Amazon executives say the IDC study suggests a 5X improvement speed and agility. Wikibon infers that to mean speed of application deployment. Its data indicates that this is true for small and simple applications but cautions that the ratio declines and sometime flips to the negative side for complex applications.

Go global in minutes: AWS now has infrastructure in 9 geographic “regions” with 25 availability zones (distinct locations within a region designed to provide failure isolation from other availability zones) and 38 points-of-presence for content distribution.

As with all Wikibon research, this report is available in its entirety on the public Wikibon Web site. IT professionals are invited to register for membership in the Wikibon community. This allows them to comment on research and publish their own Professional Alerts, tips, questions, and relevant white papers. It also subscribes them to invitations to the periodic Peer Incite meetings, at which their peers discuss the solutions they have found to real-world problems, and to the Peer Incite Newsletter, in which Wikibon and outside experts analyze aspects of the subjects discussed in these meetings.

About Bert Latamore

Bert Latamore is a freelance writer covering the intersection of IT and business for SiliconANGLE. He is a frequent contributor to CrowdChats focused on theCUBE coverage of major IT industry events and site editor at Wikibon.org. He has 35 years’ experience covering the IT industry including four with Gartner, five with Meta Group, and eight with Wikibon. He lives in the Virginia Blue Ridge Mountains with his wife, Moire, and their dog, cat and macaw. In his spare time he enjoys reading, hiking and photography.